Tribune (NYSE:TRB) is still a mess. Ad revenue is weak, circulation trends are negative, there's vocal opposition to management from a dissident shareholder with a large stake, and the entire sector is still in a rut.
Performance for this quarter was another case of the weak getting weaker. Total operating revenue was down 1%, as revenue fell in both the publishing and broadcasting segments. And though the company held cash operating expense growth to just 1%, that still led to a 9% decline in reported operating profits.
Results in the publishing business remain depressing. Revenue was only down 1%, and operating profit was down 4%, but that's not exactly something to get excited about. Circulation revenue was down 5%, and while ad revenue was flat overall, there was a discrepancy between national revenue (down 7%) and classified revenue (up 3%). Seeing these results, I can't help but wonder how far Tribune can really cut costs -- at some point, these cuts will affect the quality of the product, which will hurt circulation even more. (That, in turn, will spiral into the ad revenue side of things.)
There was also a good news/bad news event prior to this quarter's report. The company had wanted to buy 53 million shares through a Dutch auction tender offer, as part of an overall plan to buy back 75 million shares. Well, only 45 million shares were tendered (at the high end of the range), so the company will be buying millions more shares in the open market. In a weird way, this may be positive -- if folks didn't want to tender their shares, perhaps they're optimistic that another way of raising the company's value will present itself.
As I've mentioned in prior takes on companies including Gannett (NYSE:GCI) and New York Times (NYSE:NYT), newspapers are a popular topic for value investors. And as I said yesterday in discussing Gannett, I do think it's possible that these media operators will figure out a way to operate profitably in the new environment -- whether by expanding Internet offerings (Tribune's interactive revenue was up 27% this quarter) or repositioning their hard copy to provide what folks can't find from other sources.
That said, Tribune isn't my favorite way to play the eventual survival and recovery of the sector. Maybe the present turbulence will lead to more aggressive value-enhancing maneuvers, but I just don't see a compelling enough reason to bet my own money on it.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
